KARACHI, Oct 28: Moody’s cut Pakistan’s credit rating by one level to B3 on Tuesday and warned of further cuts as Germany said it would help Pakistan negotiate a deal with the International Monetary Fund (IMF).

Moody’s retained a negative outlook which it had imposed last month after Pakistan’s rapidly deteriorating external liquidity position, accompanied a stalling of economic reforms and domestic political turmoil.

Aninda Mitra, Moody’s sovereign analyst for Pakistan, said recent policy moves were not sufficient to staunch the decline in its foreign currency pile, which was further hastened by delays in assistance from key bilateral and multilateral creditors.

“The failure to obtain timely assistance from Saudi Arabia, China, the US and other friends, and delays in disbursements from the World Bank, have eroded investor confidence and resulted in a substantial drawdown of Pakistan’s foreign currency reserves,” he said.

Traders said the markets had already priced in Tuesday’s downgrade and any further reduction from Moody’s. This month, rival rating agency Standard & Poor’s Ratings Services cut Pakistan’s rating to CCC-plus, one notch below Moody’s. S&P has retained the negative outlook.

The rupee and stocks were flat following the ratings downgrade. Pakistan is scrambling to borrow funds to provide it with some breathing room, although many analysts expect it will have to seek support from the IMF.

—Reuters